The Role of Legal Administrators in Strategic Planning By: H. Edward Wesemann, Edge International

The process that law firms use to create strategic plans varies tremendously from firm to firm. Accordingly, there is no definitive or commonly accepted role for legal administrators in that process. An administrator's involvement can range from serving as the planning committee's facilitator, to being an active member of the committee, to doing little more than proofreading the final version of the plan.

The degree to which an administrator is involved depends on:

• the ongoing role of the administrator in policy issues,
• the administrator's aggressiveness in making proactive suggestions,
• the firm's culture and level of democracy,
• whether or not a consultant is involved in the plan, and
• the administrator's competence and assertiveness.

This divergence of roles makes it impossible to consider every strategic planning scenario that might occur and attempt to describe what an administrator can or should do. Rather, this article will attempt to:

1. consider the steps that are typically involved in a strategic planning process,

2. discuss possible contributions that an administrator can make in each of these steps, and

3. where appropriate, suggest some innovative ways that the administrator can contribute and bring value to the process.

The article is written under the assumption that most administrators want to be actively involved in the planning processes and take on as sophisticated role as possible.

The Strategic Planning Process

Typically, a strategic planning process involves developing an overall vision for the firm, obtaining information in an organized manner, analyzing information in a manner which makes it usable for planning purposes, developing strategies to accomplish firm objectives and creating action plans to implement the strategies. There can be an important role for an administrator in each of these steps.

Obtaining Partner Buy-in

Even in small firms, it is unworkable to attempt to have every partner actively involved in a strategic planning effort. However, it is important that the creation of a strategic plan occur with the knowledge, approval and support of the law firm's partners or shareholders. A legal administrator can play an important role in generating this support. That role may include:

• Clipping articles from publications about strategic planning and placing them in a "reading file." Circulate the best articles among the partners.
• Preparing a memo pointing out what you believe are the strategies employed by your firm's principal competitors and assess what impact those strategies are having for those firms. 
• Keeping a list of the most common objections voiced by partners (e.g., "we've never had a plan before and we've always done well," "the legal market changes too fast to have a plan") and prepare appropriate arguments. If you are unsure of appropriate responses, consult with ALA or other members of your local ALA chapter. 
• Meeting with partners individually to solicit their support for the creation of a plan.
• Encouraging the firm's management to obtain consensus on a planning process either in a meeting or through individual conversations. 

Mission Statement

Most strategic planning processes begin with the preparation of a mission statement. Mission statements are broad views of the purposes the firm is in business to accomplish and, in general terms, how the firm goes about accomplishing them. Generally a mission statement involves basic statements about the areas of practice in which the firm will engage, the types of clients and geographic areas it will serve, and specific values that are important to the firm. The mission statement is not designed to be achievable, i.e., it is an on going statement about the firm. Drafting a mission statement, however, can be a time consuming and frustrating process for attorneys. Administrators can provide valuable assistance by:

• Prepare a questionnaire for the planning committee to circulate to the partnership seeking their views on specific items for the mission statement including: 

o       The most important principals on which the firm was founded and that the partners would not sacrifice to achieve any other objective. This includes issues such as the size of the firm and its general manner of governance.

o        The areas of practice in which the firm wants to focus and areas it wishes to avoid .

o        The types of clients (individuals, small businesses, public held companies, etc.) and the industries the firm is best equipped to serve.

o        Values that are important to the partners, especially those which would not naturally be assumed, including the interrelationship of family and firm commitments.

o        Draft a sample mission statement based on the partner's responses to the above questions or taken from discussions of the planning committee. Committees sometime function best when responding to a draft document. The best mission statements are short (2 or 3 sentences) paragraphs dealing with what the firm does, for whom and how.  By there nature, mission statements are aspiration and, while they should be realistic, need not reflect the current situation.

Vision Statement

Sometimes a vision statement is helpful in focusing a strategic planning process either in addition to or as an alternative to a mission statement. Vision statements can be especially valuable when prepared by the leadership of the firm to convey to the partnership the leaders see the firm evolving.

Vision statements can be in a variety of forms but frequently describe the firm as it will be in a future year, often five to ten years in the future. Vision statements should deal with the most important issues facing the firm including:

• the size of the firm in terms of number of lawyers and/or gross revenues;
• the geographical marketplace of the firm and how the firm will serve that market, e.g., will the firm have additional offices;
• the firm's reputation among clients and within the bar;
• the firm's areas of practice;
• the firm's client's size, industries and characteristics; and
• firm characteristics for which it is known.

Frequently vision is best expressed by stating how the firm will differ in the future from the current situation and how it will differ from its current competitors. 

The legal administrator can assist the firm's leadership by preparing an outline of critical issues that should be addressed in the vision statement. Using this outline the administrator can:

• facilitate a discussion by several leaders on their vision of the firm in the future by taking down comments on a chart pad and posting them on the walls of a conference room with masking tape
• ask the leaders to individually participate in a "60 Minutes" style interview about the firm's future.
• prepare a draft vision statement based on the comments of the firm's leaders

Long Term Goals

The creation of goals is the means of equating the mission and vision statements to reality in terms of the actions that must occur for them to be accomplished. In short, they identify the most important accomplishments for the firm in the next five to ten years. There should be a limited number of goals but they should include all significant parts of the mission and vision statements.

The administrator can play an important role in the goal setting process

by:

• identifying how the major areas addressed by the mission and vision statements differ from the firm as it is today, e.g., if the vision is to be the largest firm in your marketplace in five years, then growth is an important issue.
• drafting a single sentence goal to reflect each of these areas, e.g., for growth a goal might be "to grow faster than other firm in our marketplace."
• creating a graphic to show the evolution of the mission statement to goals by breaking the statement into individual areas and showing the applicable goal in bold after each area.

Research and Analysis

Perhaps the most vital contribution an administrator can make to the strategic planning process involves the creation of information. It is important that the planning process not be a rehash of all of the past history of the firm. Yet, it is important to understand what will happen through natural trends and environmental forces if the future is unplanned.

It is easy for a planning committee to get bogged down with surplus data. The difference between "data" and "information" is that information is the data put into context. For example, the number of attorneys the firm had in each of the past five years is data. How the number of attorneys related to the firms gross revenues, profitability or the relationship of partners to associates is the conversion of data to information.

This does not necessarily mean that it is the role of the administrator to draw conclusions from the information or even attempt to interpret it. This is the role of the planning committee and if the administrator attempts to provide too much analysis of the information, the committee may view the results and bias or lacking credibility.

Important actions by the administrator during the factual information gathering stage may include:

• Have the accounting staff prepare a comprehensive list of all forms of data available from your financial management computer system. Focusing on clients, number of attorneys, practice areas, revenues and profitability, look for areas of correlation.
• Create a list of the firm's clients in descending order of revenue collected for the prior year. Identify the percentage of the firm's total clients who produced 80% of the firm's revenue.
• Create a list of the firms top 25 major clients and show the amount of revenue generated by each client, the number of billable hours charged, the average rate and the practice areas in which work was done for the client.
• Identify the revenues received in each of the practice areas of the firm and show the number clients in each practice area.
• Showa five-year comparison of profitability with the number of attorneys, gross revenues, average billing rate and average number of billable hours.
• Without divulging confidential information, discuss these analyses with the firm's auditors, administrators from other firms, the firm's bankers and other professionals who have occasion to review information about businesses. Seek their advice as to statistics that provide the most valuable information about a firm.
• Whenever possible, present information to the planning committee in a graphical format.

Environmental Information

Regardless of the trends in place within the firm, it must be aware of how the marketplace in which it operates will impact on its plan. Some ways of obtaining this information include:

• Do a computerized database search of articles and commentaries written about the legal industry and the firm's specific marketplace. Present the information obtained to the committee in a summarized form.
• Contact major legal consulting firms (Hildebrandt, Altman Weil, Edge I nternational , etc) and ask for any material they have prepared on trends in the legal marketplace.
• Obtain information from governmental units in your marketplace regarding their projections of the regions economy in the future.
• Using the national surveys appropriate to your firm (the AmLaw 100, the ALA Economic Survey, the Altman Weil Survey, the PriceWaterhouse Survey, etc.) attempt to identify trends among law firms and compare your firm to those trends.

Client Issues

The practice of law can be an extremely inbreed profession. In large measure, clients drive firm's practices, pricing and relationship with the marketplace. As the firm begins to develop assumptions about the legal marketplace and their positioning in their markets, it makes sense for a firm to take into consideration the views of both the firm's clients and clients of other firms.

It is important to recognize that obtaining client input in a strategic planning process is substantially different than a client satisfaction survey; although the two are frequently confused. While client satisfaction surveys are valuable tools, the most valuable client input in strategic planning involves what level of services clients expect to buy in the future and their perception of the firm and its capabilities.

Most legal consulting firms can perform client input surveys. In addition, there are a number of marketing firms that also do this level of work. However, client research can be expensive and is only as valuable as the questions asked. An alternative is for a firm to invite a number of clients or non-clients to one of several focus groups. At such sessions, the firm's vision and goals are presented together with a report of how the firm views trends in the market. Then the clients are asked to comment on whether they agree or disagree with this information from their perspective.

Such sessions are best conducted by a consultant experienced in facilitating focus groups. Some firms attempt to use partners in this role. Experience shows that this is rarely successful. An alternative is for the firm's administrator to serve as the facilitator. As a non-lawyer, the administrator is often viewed as more objective by the clients. 

SWOT Analysis

An important part of the strategic planning process is an analysis of the firm's strengths, weaknesses, opportunities and threats (SWOT). Strengths are those areas that provide the firm with a competitive advantage. It is important to distinguish competitive strengths from apparent strengths. For example, most firms believe that among their strengths are the fact that they have good lawyers and nice people. Yet if most firms believe this to be true, they cease to be competitive strengths. Conversely, weaknesses are areas that represent a competitive disadvantage. Strengths are those factors that support the firm achieving its long term goals. Weaknesses are those factors that hinder goal achievement.

Opportunities are those situations where by position, timing or serendipity, the firm could be able to do certain things to its advantage that are either not available to competing firms or to which they are unable to respond. Threats are situations where a competitor may take advantage of one of the firm's weaknesses or diminish one of the firm's strengths to their advantage. Threats may also be a trend or something that occurs in the marketplace that may be detrimental to the firm.

• The process of generating the SWOT analysis is frequently in an open meeting of the planning committee. This can be an unproductive setting if the members of the committee have not had an opportunity to think about this issue in advance. The administrator can playa valuable role by:
• Reviewing the information gathered by the firm and preparing a list of the strengths, weaknesses, opportunities and threats implied by that information.
• Meeting with members of the committee individually to talk about the firms strengths, weaknesses, opportunities and threats using the list prepare from the research information.
• Provide members of the committee with a sample list of strengths, weaknesses, opportunities and threats generated by the information and from the conversations with committee members. The lists should not make attributions or judgments about the items listed. These lists could provide a valuable starting point for committee discussion. 

Formulating Strategies and Tactics

It is important to recognize the difference between a strategic plan and a business plan. A strategic plan involves the way in which the firm will approach the marketplace: the services it will offer, the clients and industries it will serve and the reasons it will present why clients should hire the firm rather than a competitor. A business plan involves dealing with the firms’ weaknesses and putting necessary actions in play that permit a strategy to be implemented. For example, many firms' strategic plans deal with retaining associates or improving technology. While these are both important issues, they are business issues, not strategy. That is, clients expect the firm to have trained associates available to do their work and necessary computer systems for the work to be performed. Only to the extent that having associates available or having advanced technology significantly differentiate the firm from competitors does it come to the level of a strategy.

Unfortunately, business issues are often easier to wrestle with than strategic issues so planning committees sometimes prefer to spend their time on them. The firm's administrator is the individual responsible for most of these business issues. As such, it is important that he or she identify these as business issues and be prepared to provide actions steps that will respond to the business issues.

Mission statements describe the markets a firm wishes to be in, strategies are the broad means by which a firm wishes to capture that market and achieve its long-term goals and tactics are the actions necessary to implement a strategy. One of the difficulty law firms frequently have is the desire to leapfrog strategies and proceed directly to tactics.

It is both the beauty and the curse of the lawyer mind that it constantly wants to identify the next action step. For this reason lawyers usually want to skip discussion of strategies and move immediately to tactics. The strategic planning process is a disciplined way of thinking about planning. It forces the planners to consider the optional means of achieving an objective. For example, early on in a strategic process it would not be unusual for someone to suggest that a good profitability strategy would be to open a Paris office. If a firm's strategy is to increase revenues from existing clients and their clients have significant interests in Europe, then a tactic might be to open a Paris office. But to immediately jump to opening an office without going through the process of clarifying the strategy often leads law firms down dangerous and expensive paths.

The legal administrator can provide two important roles in the tactic setting process. First, the administrator must often make sure that the committee stays on track in appreciating the need to separate strategies from tactics. One way of doing this is, when a tactic is introduced, to question the strategy to which it applies. This simple question can serve to maintain the integrity of the planning process and keep the committee organized.

A second important role for legal administrators is to manage the implementation process. Implementation starts with planning actions to make tactics occur and includes building a procedure to assure that those actions actually occur. In order for tactics to be implemented the following conditions must exist:

1. There must be a defined successful completion. The true test of a strategic plan's tactics is whether the firm can look at the plan a year or two later and determine whether it has accomplished anything. Unfortunately tactics such as "improve the quality of our client base" are meaningless if the firm doesn't define what represents a quality client and create a way to measure comparative quality over time.

2. Someone to be accountable for the actions involved in completing the tactical plan. In order to implement a plan, someone needs authority to manage. Management involves getting people to do things they don't do on their own. At some point in the implementation of a strategic plan, managers need authority to compel people to take action. This means that partners must be accountable to a firm's managers and ultimately to the other partners for taking the actions necessary to implement the plan. This is a tough concept for law firms because many partners view themselves as individual professionals whose only responsibility is to their clients. If a law firm has problems getting partners to submit their time charges promptly or get their bills out, it should come as no surprise that the firm can't get a plan implemented. This lack of accountability does not, typically exist in the non-lawyer staff of a firm. Therefore, if actions which do not absolutely require attorney involvement can be delegated to the administrator, the likelihood of successful completion raises geometrically. For this to occur, however, the administrator must be prepared to accept advanced levels of authority and be prepared to accept some level of criticism if implementation is not effective.

3. There must be an expected timetable for completion. In their practice, lawyer’s ability to maintain options and flexibility is valued. Therefore, they carry this desire into the planning process. A plan without a timetable will never be accomplished. Administrators know better than anyone what actions can be realistically accomplished. They should bring that knowledge to the action planning process to both produce realistic expectations and to assure that results occur.

Working with Consultants

Often the planning process is accelerated through the use of a consultant experienced in strategic planning. In most cases using a consultant can actually enhance the importance of the administrator's role. Issues that internal law firm planning committees accept through intuition and "gut feel" will be challenged by a consultant. This requires the creation of information to determine the accuracy of the committee's assumptions, as task that will fall to the administrators. Typically, the consultant will seek an available communications source. Since law firm partners have extensive practice and travel commitments, an experienced consultant may look to the administrator to expedite the communications process.

Upon entering a strategic planning engagement, the consultant must make a judgment about the capability of the firm's administrator. It can be helpful for the administrator to contact the consultant soon after engagement and discuss the information the consultant will need, what assistance the administrator can provide and candidly respond to any background questions the consultant may have.

Summary and Conclusion

The role of legal administrators in the strategic planning process is, in large measure, a function of the authority that administrators are prepared to accept and the assertiveness with which they are prepared to insert themselves in the planning process. 

Bibliography

Wesemann, H. Edward "The Awful Truth: 10 Facts About Law Firm Strategic Planning, Legal Management, March/April, 2000.

Editor: Todd A. Wiggins (twiggins@cpmas.com) (This publication is the property of the Atlanta Association of Legal Administrators. Reproduction or reprint without prior permission is strictly prohibited. Click here to request reprint permission.)

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